Broker snap: Impressive cash flows at Domino's

16th Nov 2009 11:47

Shares in Domino's Pizza have risen by a third in price since the beginning of September, prompting Charles Stanley to downgrade its rating, despite the pizza delivery outfit issuing another upbeat trading statement on Monday morning.The company has announced its intention to buy back 6m shares at 317p each, which Charles Stanley sees as 'a clear expression of the group's confidence in current cash flows.''Management confirmed today that trading since Q3 had remained as strong as previously. This level of confidence has resulted in full year expectations being reaffirmed and the use of a repurchase programme to return funds to shareholders,' analyst James Dawson notes.Charles Stanley has left its 12-month price target unchanged at 365p, but has shifted its recommendation from 'buy' to 'add'. 'However, we retain our full year PBT [profit before tax] expectation for FY09 of £28.2m, which we believe remains slightly above consensus,' the broker concluded.